Stagecoach cuts forecast after Paris attacks

Shares of Perth-based bus and train operator Stagecoach fell more than 13% after it said the terrorist attacks in Paris have discouraged people from traveling to major cities in the UK and mainland Europe, causing the company to cut its earnings forecast for the year.

Stagecoach’s megabus.com operates services between the UK and cities on the European mainland, including Paris, Brussels and Amsterdam.

The company said that since mid-November, it has experienced “a reduction in the rate of revenue growth in parts of our rail and inter-city coach operations in the UK and continental Europe.”

“We believe that revenue has been adversely affected by the terrorist attacks in Paris discouraging people from travelling to major cities,” said Stagecoach as it announced interim results for the six months to October 31.

“We currently anticipate a recovery in those revenue growth rates. We have also recently seen softer than expected revenue at a number of our regional UK bus businesses.

“As a result of these factors, we have modestly revised down our forecast of adjusted earnings per share for the year ending 30 April 2016.”

According to Bloomberg data, analysts have cut Stagecoach’s adjusted earnings-per-share forecast by about 5 percent for the 12 months through April 2016.

Stagecoach’s adjusted earnings for the six months to October 31 were up 12.6% to 17p per share. Interim dividend was up 9.4% to 3.5p per share.

Revenue jumped to £1.97 billion from £1.54 billion in the same six months last year, with more than £1 billion of revenue coming from the firm’s UK rail businesses.

Stagecoach chief executive Martin Griffiths warned about the dangers of shrinking public investment in local transport in the UK.

“Public transport is a shared responsibility between the public and private sectors,” said Griffiths.

“It is crucial that the investment of transport operators is matched by steps by the public sector to tackle the growing challenge of road congestion, which is holding back the potential of the bus.

“At the same time, shrinking public investment in local transport can impact on the cost of travel and the network of services. We look for efficiencies within our own businesses to protect our customers as far as we can from any impact of Government cuts.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.